Sales in GE Energy fell 1 percent to $9.57 billion in the second quarter as a drop in service revenues offset equipment sales. But the energy business, strengthed by pricing and increased productivity, saw its profit rise 13 percent to $1.79 billion from the same quarter last year.
So, why does this matter for a conglomerate that owns NBC Universal, Capital Finance and a healthcare unit -- to name a few? As Keith Johnson over at WSJ Environmental Capital notes, GE Energy accounted for 24 percent of sales and 36.7 percent of segment profit for the group in the second quarter.
GE Energy makes power generation equipment for traditional plants using gas turbines and generators as well as more those powered by renewable energy including wind, solar and biogas. GE Energy includes water, rail and aviation as well as oil and gas products.In all, GE Energy received $6.5 billion in orders, down one-third from last year and essentially flat from the first quarter of 2009. Equipment orders were down in most areas, notably in thermal, aero and wind. However, GE has a significant backlog or orders, providing a cushion of sorts during the global recession. For example, thermal orders -- that's gas turbines and the like -- were down 60 percent to $1.2 billion in the second quarter. The backlog of thermal orders is $7.1 billion.
Wind orders were down 60 percent to $500 million in the second quarter. Vice Chairman and CFO Keith Sherin said during a Web cast Friday, he expects those numbers to recover now that the U.S. government has clarified rules for accessing stimulus dollars.
"There are a lot of wind commitments out there that need to be finalized," he said, adding the $4.2 billion backlog of wind orders is still strong.
CEO Jeff Immelt noted there's about $190 billion of stimulus potential for clean energy, affordable health care and a scattering of other projects, with almost nothing coming out, so far.
GE has seen some early wins with smart grid orders up 70 percent, said Immelt, who also pointed to strong spending by China and increased activity around the nuclear business.
One area, that's has seen considerable growth was the $390 million worth of orders for natural gas and pressure equipment -- four times higher than the second quarter last year.
Other tidbits from GE's second-quarter 2009 report:
- Revenues from continuing operations fell 17 percent to $39.1 billion in the second quarter compared to the same year-earlier period and were in line with the company's expectations;
- Global growth was strong with second-quarter industrial revenues up 31 percent in China, 46 percent in India and 10 percent in the Middle East;
- Segment profits fell 36 percent to $4.9 billion reflecting losses in technology infrastructure as well as the company's NBC Universal, Capital Finance and C&I units.